Gas price hike could hit fert subsidy plan
The proposed new urea investment policy aims at facilitating investments to the tune of R35,000 crore in fresh urea capacities.
The proposed new urea investment policy aims to reduce the countryís dependence on imported urea, which is far costlier (the current import price of urea is around $ 380 per tonne). According to the fertiliser ministry, if the price of gas is hiked as recommended by the Rangarajan panel, the differential between costs of imported and domestic urea would come down, making the new policy superfluous.
At present urea is sold at an administered price of Rs 5,310 per tonne, while remunerative price for the companies would be more than double this. The widening differential between the remunerative price for the industry and the MRP along with the high cost of imported urea (imports account for a quarter of domestic consumption of the fertiliser at present) are the reasons why the subsidy bill has increased exponentially in recent years.
In Budget 2013, the fertiliser subsidy was estimated at Rs 60,974 crore, including Rs 13,398 crore for imported urea, Rs 19,000 crore for indigenous urea and Rs 28,576 crore for the sale of decontrolled fertilisers (DAP, MOP and complexes). The fertiliser industry has sought an additional subsidy payments of Rs 40,000 crore in this fiscal.
The government recently constituted a group of ministers (GoM) headed by agriculture minister Sharad Pawar to look into urea pricing. The GoM will
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